Trusts in the family home Flashcards
Ownership of Land
Legal owner – has legal title
Equitable owner – has equitable (beneficial) ownership
Trust in land – Where legal and equitable ownership are split.
Three Possibilities.
1 -Sole legal and equitable owner
2 -Sole legal owner, holding the equitable title for somebody else
3 - Sole legal owner, holding the equitable title for himself and other equitable owners.
Trust – Definition.
“ A trust is an equitable obligation binding on a person (who is called the trustee) to deal with property over which he has control (which is called the trust property) for the benefit of persons (who are called the beneficiaries or cestuis que trust) of whom he may himself be one, and any of whom may enforce the obligation”. (Underhill).
Express Trust
Must be in writing/ evidenced in writing.
LPA 1925 s. 53(1):
(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;
(b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.
Jones v Kernott [2011] UKSC 53
- The Jones v Kernott case concerned the rights of Leonard Kernott and Patricia Jones and their entitlement to a £245,000 property which they bought in Essex in 1985. Ms Jones paid £6,000 from her own funds with the remainder being funded through a mortgage.
- Ms Jones paid the property outgoings including the mortgage and the bills, whilst Mr Kernott paid for some improvements to the property.
• The couple split up in 1993. Mr Kernott moved out and made no further financial contributions to the property or to the family home. The couple cashed in a joint life insurance policy and divided the proceeds, which enabled Mr Kernott to purchase his own home in 1996.
• In 2006, some 13 years after they had separated, Mr Kernott decided to seek repayment from Ms Jones for his share of the property. As a result, Ms Jones started legal proceedings to obtain a declaration that she owned the entire beneficial interest.
• It was recognised that the couple owned the property equally at the point of their separation, but Ms Jones argued that Mr Kernott’s beneficial interest had reduced due to his lack of financial contribution since moving out
Court decisions
• The County Court and High Court both agreed that Mr Kernott was entitled to just 10 per cent of the property value. This decision was based on the couple’s financial arrangements during the time they were apart.
• However, this was then overturned by the Court of Appeal, which ordered a 50/50 share on the basis of the original agreement.
Geary v Rankine [2012] EWCA Civ 555
• D and C (Mrs Geary) were in a relationship while C was in the process of divorcing her husband
• D bought a guesthouse he intended to run as a business
• D hired a manager but due to problems he started managing it himself with substantial help from his C
• C claimed that she acquired beneficial interest in the guesthouse
• C’s lawyer did not argue that there was any common intention to share beneficial interest when property was required but there was a change in common intention
Held (Court of Appeal)
• There was no business partnership which could be inferred
Burns v Burns [1986] Ch 368
- Mr and Mrs Burns were an unmarried couple, whose home was in Mr Burns’s sole name
- After 18 years together, they split up, and Mrs Burns claimed a beneficial interest in the home
- The claim failed, on the ground that it was impossible to find the necessary common intention between the parties that Mrs Burns should have such an interest
Pettitt v Pettitt [1970] AC 777
• Mrs Pettitt inherited a house in which her and her husband lived. He spent £800 on repairs and redecoration of the property. She sold the house in 1961 and purchased another property which was conveyed into her name alone. There was some money left from the sale which she gave to her husband to purchase a car. They lived in the new house for four years and then divorced. He claimed that he had a beneficial interest in the property based on improvements made to new house. He estimated he had spent £723 on the property and claimed to be entitled to £1,000 from the proceeds of sale.
Held:
• Mr Pettitt had no interest in the property. The improvements were insufficient to create an equitable interest in the property.
Grant v Edwards [1986] Ch 368
- A couple lived together with their children from separate marriages
- The man (D) told the woman (C) that her name was not included on the title because it would cause her prejudice in the divorce proceedings against her husband
- D paid for the mortgage while C made substantial contribution to household expenses
- When the parties separated C claimed a beneficial interest in the house
- Held: C had 50% beneficial interest
Eves v Eves [1975] 1 WLR 1338
• An unmarried couple had a daughter and bought a house registered under the man (D)’s sole name using his funds
• D had made an excuse to the woman (C) that he would have put her name down if she was 21 years old
• C did much of the work to refurbish the house
• Later D told C he was going to marry another woman which he did after leaving the house
• C sought to claim a share in the house
Held (Court of Appeal)
• The law will impute or impose a constructive trust by which D was to hold the property in trust for both himself and C
• C was to have ¼ beneficial interest in the property
Lloyds Bank v Rosset [1990] 1 All ER 111
- The defendant, Mrs Rosset, was married to Mr Rosset, who was the sole registered owner of the property in question. Mr Rosset had bought this house with his family trust money, which had insisted on his sole ownership as a condition for using that money. Mr Rosset had secured a loan against the property from the complainant’s, Lloyds Bank. The defendant had helped in the building work and decorating of the property. However, Mr Rosset defaulted on his payments and the complainants sought repossession of the property.
- It was held that the defendant did not have a beneficial interest in the property. Mrs Rosset did not make any financial contributions in buying the property nor for the renovations; she had only helped with the physical building and redecorating of the house. There was no discussion or agreement between Mr Rosset and Mrs Rosset regarding the ownership of the property and without express agreement, there could be no beneficial interest for the common intention needed to form a constructive trust. Mrs Rosset’s work on the house was not enough to form an equitable interest. Thus, the complainants were successful.
Types of Trust
- Implied Trust
- Resulting Trust
- Constructive Trust
- Proprietary Estoppel
Created by an operation of law. LPA 1025 s .53(2)
Stack v Dowden [2007] UKHL 17
Ms Dowden and Mr Stack were co-habitees. They purchased a house in their joint names but made no declaration as to entitlement of the beneficial interest in the property. The purchase price of £190,00 came from £129,000 of MS Dowden’s savings and sale of her previous property. The remainder came from an interest only mortgage and two separate endowment policies. Mr Stack paid the mortgage instalments totalling £27,000, Ms Dowden paid £38,000. Ms Dowden paid the majority of the utility bills. They had separate bank accounts and made separate investments. The parties then separated and Mr Stack brought an action for sale of the property and distribution of the proceeds in equal shares.
Held:
The starting point for determining beneficial interests where the legal title was held jointly is that beneficial interest will also be held jointly. This presumption may be displaced where there is evidence that this was not their intention.
